I would seriously think about using a real merchant account in lieu of paypal pro. Every transaction used in paypal pro is not covered under the seller protection policy unless the customer uses express checkout and has a confirmed address. Paypal pro kind of acts like a merchant account, but you don't get the same protection. Make sure to read all of the info and ask many questions from the paypal staff. I think you will decide not to use paypal. After leaving my old merchant account, I thought paypal pro would be great, but they just can't offer the protection a real merhcant account can. It may seem cheaper month to month, but it can cost you more in chargebacks. I am only using paypal now until my new merchant account is setup, which will be soon.

There is not a whole lot of seller protection with any merchant. They all talk a good game on fraud protection but just wait for your first chargebacks and then tell me what kind of seller protection you got from a merchant. It's basically the honor system. It's really do or die with credit cards. If you don't accept them no customers. If you do accept them you have to figure in a certain amount of fraud because it will happen. Thats why merchants offer things like the first 5 chargebacks are free each month (instead of the $35 dollar fee on top of your lost money)? first 5? how many do you think I am going to get was my first reaction and I soon found out.

One thing to remember also, when you do get a chargeback, There is a certain set of procedures that the merchant must follow. They will get your chargeback resolved in a certain amount of time, regardless who is at fault. When I say resolved, I mean, they determine who is at fault and who has to pay.

With paypal, since they are not a merchant, they don't have to follow these rules and they can hold your entire account and all the funds until the matter is resolved, if it ever does get resolved. They hold your funds and suspend your account for as long as they want. There are many true case studies where this has happened to people.

We would never use paypal to receive payments for that exact reason. Paypal always rules what is in their best interest regardless of the facts of the claim. You have no recorse and they do not need to follow any rules. In addition they have been know to jump into your checking acount and grab what ever money they are out should something go wrong with the purchaser. You are far better off to pay the 35.00 a month or so to get a real merchant account. in hind site, now we always say "beware of paypal"

We recently got burned on an e-bay purchase. I complained to paypal that the item was not the item listed on e-bay. They still refuse a chargeback. So instead I did the chargeback though the AMEX card I used to purchase through paypal (they offer the best purchaser protection) and Paypal got burned for the money. If they can get it from the seller more power to them, if not they deserved the chargeback for not even looking at the facts. If you do use paypal to purchase, make sure you do not link a checking acount to it and always use a credit card for purchases whether you use paypal or not.

Use your own merchant such as verisign. You always want to be able to see the credit card numbers and verify the order yourself to prevent any chargebacks 100%.

Here's what we do. We check the credit card on the merchant's secure site (nothing's stored in our database). Then we print out the billing address/phone number provided by the customer.

We call the general visa/mastercard/amex global hotline and by typing in the card number we get the bank or card issuing company's phone number.

Then we call up the card issuer and say we'd like to do a "name and address verification". We provide them with the billing details we received (name, address, phone #). The customer service rep tells us whether or not it's a match. If it's a match great! If the billing and shipping address are the same that's it.

Now if you're given a different billing and shipping address you have to go one step further. Once the card issuing company has confirmed the billing address is correct. You then telephone the phone number from the billing address and confirm that they placed the order and approve it. If they say "yes" then you know it's ok to ship it to the other address. If they say "no" then you know it's a fraudulent order.

Works 100% of the time. It's extra work, but only takes about 2-5 minutes and takes all the worries away.

Hi Natlus,Thanks for the tip on how to prevent chargebacks. This is helpful to me as a merchant.

I just have a question: What type of situation does chargeback occur? Like, if I have an order, and if the address is not a confirmed address, I call the customer and talk to them before I ship an order. I tell them that the shipping and billing addresses do not match then I take down their billing address. Also, I just feel safer that I get hold of them thru the phone number they left on the order.

So you have a phone number (or web sure) that gets you the cards customer service number? That would be handy. Do they give you the bill to phone number? If you are counting on calling the number they gave you, then that wont work. If I have a place to call and get customer sevice for the card, and they give me the card owners number, then that would be great!

quote:Hi Natlus,Thanks for the tip on how to prevent chargebacks. This is helpful to me as a merchant.

I just have a question: What type of situation does chargeback occur? Like, if I have an order, and if the address is not a confirmed address, I call the customer and talk to them before I ship an order. I tell them that the shipping and billing addresses do not match then I take down their billing address. Also, I just feel safer that I get hold of them thru the phone number they left on the order.

What other type of situation that you get hit by a chargeback?

You get a chargeback when you charged a card that was stolen (or the info was stolen). The problem with calling the number the customer provided you with is that if it's a stolen card they might just give you their own cell number (yes, some criminals aren't smart). So then if you call them they'll just say "yes i placed the order".

Just make sure you state on your site where people can see that the billing information provided by them must match what they have on file exactly.

Remember, this doesn't work with services like Paypal because you need to see the credit card number and expiry.

You can even request that people who enter different shipping/billing addresses have both on file with their credit card company. Sometimes people aren't at home during the day so they put their work address as the shipping address. They can add it to their credit card profile. It's good to mention that somewhere before they place an order so that they know.

quote:So you have a phone number (or web sure) that gets you the cards customer service number? That would be handy. Do they give you the bill to phone number? If you are counting on calling the number they gave you, then that wont work. If I have a place to call and get customer sevice for the card, and they give me the card owners number, then that would be great!

What happens is when you call the global hotline for mastercard or visa, you go through some menu choices and it'll ask you to enter the full credit card number. Then it will state the bank/card issuing company's customer service phone number. You then call that number and try to get a customer service rep. You mention to them that you're calling for a "name and address verification". Sometimes they will ask you where you're calling from and what your merchant ID is. Then you tell them the information that was provided to you by the customer. All the rep can do is say "yes it matches" or "no it doesn't match". They can't provide you with any information. Sometimes they'll tell you "everything, but the phone number doesn't match". So then you contact the customer and ask them to provide the phone number on file.

If they give it to you, then you call up the customer service again and see if it matches.

If the shipping/billing address was the same then you're finished.

When it's different, then that's when you call up the phone number that you know is on file with the credit card company because you verified it. Then you confirm with the person that they made the purchase.

Now, you can decide when to do these checks. If you get lots of orders then you might decide to do them only for orders above $200 or $500.

Common sense also plays a factor. I usually don't do verifications for $20 orders or $50 orders because it's not worth a criminal's time to charge so little. They go for big ticket items that cost $500 or more. That's for electronics. If you sell software then it's good to do the check for every order.